Professional December 2020 - January 2021

Professional December 2020 - January 2021

Official publication of The Chartered Institute of Payroll Professionals PROFESSI NAL Issue 66 December 2020 - January 2021 in Payroll, Pensions & Reward

Customer and client fulfilment

It’s a real stretch Beyond December

The (payroll) nightmare before Christmas Service delivery challenges

Saying thank you? Seasonal gifts

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“Hope is being able to see that there is light despite all of the darkness.” Desmond Tutu (1931– ) (https://bit.ly/33d4U4i)

Recently, while wondering how people react in awful times, I researched the Spanish flu pandemic of 1918, and remembered watching in my teens the

weekly applause for NHS staff, during lockdown. Well, it’s that annual moment to extend my thanks to all those at the CIPP and beyond, without whose support and input production of the magazine would be impossible. Particularly meriting of my appreciation are the designers Sam Parkes and James Bartlett, the policy team for their continual supply of great articles, and Dawn Baxter and colleagues for their support and timely delivery of in-house content. Bring on 2021!

film The Seventh Seal , in which a desperate group somewhere in Europe strive to avoid

the plague and evade death (depicted as a stalking grim reaper). During this horrible year I have found comfort and cheer in doing simple things, such as Skype-ing my grandchildren, and in the inspirational actions of countless people – especially the following individuals. Marcus Rashford, a highly paid professional footballer, who triggered government policy turnaround on school meals provision. Annemarie Plas for initiating Clap for Carers, the UK-wide

Mike Nicholas MCIPP ([email protected]) Editor

Chair’s message

I hope this finds each of you safe and well and adjusting to the new ways of working. The feature topic this issue is customer and client fulfilment. Whether providing a service to an external or an internal client, I have some thoughts and messages to help

The key link here is communication. Very often once a commercial agreement is made, or objectives set for the service, those items may be parked. It is especially important to revisit and refresh them and keep the priorities front of mind for all delivering the service. Transparency and regular communication help to resolve items quickly and highlight where either the internal or external customer maybe hampering the service team, by not delivering information for action, either in a timely manner or to a quality expected. Client fulfilment can only be achieved if both parties are willing to listen, keep an eye on what is important and work together to overcome obstacles. This in turn, moves a service agreement to a partnership approach. I hope you find the articles contained in this edition of interest and of benefit to you, and please drop me a line if you want to discuss anything in more detail.

either situation. Very often in an external outsourced arrangement the most senior members of both businesses begin the process of tender response, pre-sales activity, system demonstration and contractual discussions. All this often happens either without anyone from the operational side of the business working alongside the team or perhaps from a distance. Therefore, any handover to operations once an agreement is made, and is in service, must ensure that all the finer points from the earlier conversations are documented and understood. It can be the smallest nuance in the early discussions that, if not transferred, can make a big difference to the service management and the expectations of the client and the service team. Take this scenario to an internal service provision, and you have the same issue if what is discussed in the boardroom as expectation is not then communicated to the team operating day to day services.

Jason Davenport MCIPP MIoD ([email protected]) Chair, CIPP

What a year! I’m sure it’s one which we will not forget, personally or professionally. I am writing this as we hear the news that the coronavirus job retention scheme has been extended and the job support scheme CEO’s message

dominated by MS Teams and Zoom (other platforms are available!), where human interaction in celebrating our profession has been almost non-existent. Let’s focus on next year – may 2021 be the time when we get together for the Annual Conference and Excellence Awards at the Celtic Manor Resort, a ‘double’ Graduation celebration to celebrate 2020 and 2021 successes, National Payroll Week, and the chance in our 41st year to actually celebrate our 40th anniversary in person! Finally, on behalf of all the staff and board here at CIPP, I wish you all a well-deserved break over the Christmas and New Year period. May it be spent with family, friends and loved ones. Keep safe and well.

postponed as we move into another national

lockdown. Payroll professionals; key workers indeed. Certainly, our Advisory Service has had its busiest year ever; hopefully, we have been able to give you help and assistance during these turbulent times. May I thank all who have availed of the assistance as, despite thousands of calls and emails at times and having to wait to be answered, I have been assured by the team that not one angry or unkind comment has been made by members in seeking help and guidance. That’s really appreciated, and it is a testament to your professionalism during these challenging times. This is a time when I normally reflect on the events we have delivered to you, our members. Well – it’s been a virtual year –

Ken Pullar FCIPP ([email protected]) Chief executive officer, CIPP

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| Professional in Payroll, Pensions and Reward |

Issue 66 | December 2020 - January 2021

in Payroll, Pensions & Reward PROFESSI NAL

Also available online at payrollpensionsandreward.org.uk

Contents

December 2020 - January 2021

THIS ISSUE’S FEATURE TOPIC IS CUSTOMER AND CLIENT FULFILMENT

24 Customer and client fulfilment

by Jerome Smail

Features

12

16

18

The (payroll) nightmare before Christmas by Lora Murphy

CJRS receives twelfth hour reprieve by Samantha Mann

Mental health support by Harriet Calver

22

27

20

Get ready for changes to off-payroll working rules by HMRC

Aggregation of earnings by Peter Minchinton

Labour market strategy by CIPP policy and research

| Professional in Payroll, Pensions and Reward | December 2020 - January 2021 | Issue 66 2

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Chief executive officer Ken Pullar FCIPP CIPP board of directors Jason Davenport MCIPP MIoD Stuart Hall MCIPPdip Dianne Hoodless MSc ChFCIPP FHEA Editor Mike Nicholas 0121 712 1000 | [email protected] Advertising Vickie Graham 07775 564 352 | [email protected] Design James Bartlett, Nicole Davis and Sam Parkes [email protected] Printing Warwick Printing Company Ltd

Homeworking expenses and benefits by CIPP policy and research

It’s a real stretch… by CIPP policy and research

32

34

Splitting of pension funds on divorce by Ian Neale

Saying thank you? by Gemma Mullis

36

35

Liz Lay MSc FCIPPdip Carole Pearson MCIPP Katie Sharpe ACIPPdip

Equal pay, dismissal, disability by Nicola Mullineux

Cliff Vidgeon BA (Hons) FCIPP CMA ACIS Clare Warrington MSc FCIPPdip AFHEA

Where next for AE? by Henry Tapper

Useful contacts

41

38

Education [email protected] 0121 712 1023 Events [email protected] 0121 712 1013 General enquiries [email protected] 0121 712 1000 Marketing and sales [email protected] 0121 712 1033 Membership [email protected] 0121 712 1073 Training [email protected]

Finding a partner in payroll success by Abigail Vaughan

The extended job retention scheme by Danny Done

Regulars

01 Editor’s comment, and

30 Payroll news 31 Reward

Chair’s andCEO’smessage

04 CIPPupdate

Events, news and developments

40 Industry news 41 Technology 42 So long, farewell... Vince Ashall 43 Wordsearch 50 Confessions of a payroll manager Additional online content 44 What makes an employer-provided benefit ‘qualified’ (in the USA) 45 Employees accessing their pension early

06 My CIPP

0121 712 1063 cipp.org.uk @CIPP_UK

Policy hub: On your behalf, Advisory

10 Beingpayroll 11 Movers and shakers 12 Personal development Diary of a student 15 COVID-19 news 16 Compliance

Articles Please support this magazine so that it can continue to be a part of your membership package. Trademarks The CIPP logo, the initials ‘CIPP’ and the words ‘Professional in Payroll, Pensions and Reward’ and ‘CIPP Consult’ are trademarks of the Chartered Institute of Payroll Professionals. Copyright: The Chartered Institute of Payroll Professionals 2020. The Chartered Institute of Payroll Professionals, Goldfinger House, 245 Cranmore Boulevard, Shirley, Solihull, West Midlands, B90 4ZL. Switchboard 0121 712 1000 Copyright This magazine is published by The Chartered Institute of Payroll Professionals in whom the copyright is vested. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher. The views expressed in this publication are not necessarily those of the CIPP or the editor. The information and comment contained in this publication are given in good faith, their accuracy or completeness cannot be guaranteed.

Full issue including additional online content available at payrollpensionsandreward.org.uk

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| Professional in Payroll, Pensions and Reward |

Issue 66 | December 2020 - January 2021

CIPP update

CIPP celebrates 40 years of supporting payroll professionals AS THE Chartered Institute moves through its 40th anniversary year, we continue to review our history. We have spoken with industry luminary Alan Wigley MSc FCIPP, who has provided the following comments.

and the USA. I believe it was the Institute that turned payroll into a true profession especially with links to the likes of HM Revenue & Customs.” What was your proudest moment working for the Institute? – “Being elected CIPP chair, which coincided with Gordon Creswell FCIPP being elected to the board.

What was your role within the Institute and across which dates? – “After successfully completing the Diploma in Payroll Management I became a tutor and received lots of backing from Institute staff and fellow tutors. Seeing my first students graduate after two years was a proud moment for me. “I was invited to write the first fast-track diploma course whilst delivering this to students in Manchester. With the assistance of Lawrence Worrall (deceased) this proved successful and was launched in other parts of the country. “One of my students, who worked for me, took over my tutor role so I could concentrate for the MSc in Payroll Management. In 2001, after successfully completing my MSc and being named ‘UK Payroll Manager of the Year’, I was invited to join the board of CIPP. I stayed for six years, the last two as chair, before standing down due to a job opportunity that took me to Spain for a few years.” What was your motivation for being involved with the Institute? – “I started working in payroll in 1975 as a wages clerk for a heavy engineering company. At that time, wages and salaries clerks (note, not ‘payroll staff’) were not seen as being of much value to many organisations and were the lowest grade for office- based staff in most company structures. It certainly was not seen as a career. “After four years I went to work within the local authority, where the payroll function was still seen as a lower graded role. When, in 1980, the Association of Payroll and Superannuation Administrators (APSA) was launched, linked with our trade union NALGO (National Association of Local Government Officers), I felt that being a member of a professional body would help raise my profile in payroll. I was also able to use the letters ‘MAPSA’ after my name. This certainly helped, as in the mid-1980s I progressed through the organisation from wages clerk to payroll manager. “When the British Payroll Managers Association was formed I thought it was another opportunity to raise my profile, so as soon as the Diploma was launched I signed up immediately. “All these moves motivated me in my career that now spans 45 years in payroll. I have had the honour of representing the CIPP not just in the UK but in Canada, India, Ireland, South Africa,

Gordon has been instrumental in the development of the Institute, and someone I greatly admire. It was also the 25th anniversary of the formation of APSA. It was great to see the likes of Graham Francis FCIPP, Peter Blackhurst FCIPP, Lawrence Worrall, and other APSA founders in attendance. As a member of APSA I was the first to become CIPP chair.” What do you think has been the biggest change for the profession over the last forty years? – “I’m sure nearly everyone working in payroll is screaming ‘furloughing and the events that are happening today’, but due to a major operation I’ve missed all the stress and hard work payroll professionals have endured this year. I did, however, recognise the value payroll was providing to employees, employers, and the government in ensuring all payments were made accurately and on time.” “Which leaves me to talk about the introduction of statutory sick pay in 1983 when employers became responsible for paying it for the first eight weeks of illness. Payroll software providers struggled to provide automated calculations, especially when there was occupational sick pay to consider, so it became a manual process. As we had a weekly payroll in excess of 20,000 employees with high sickness levels it became an absolute nightmare to administer. (I think it still is for some organisations.) This was later followed by other statutory payments to the ones we have today.” What would you like to see the CIPP achieve in the future? – “I would like the CIPP to continue raising our profile especially with our government and business leaders. I would like one day to hear our prime minister acknowledge how valuable the profession is to all and sundry. Not just when we have the challenges we face today, but those we constantly face every week. Hopefully, this will get our profession and the commitment of all payrollers recognition of the hoops we jump through to support our colleagues and our country constantly, meaning we are not taken for granted.”

Festive season office closure THE CIPP office will close on 18 December, but the Advisory service will remain open until 22 December. The office and all services reopen on 4 January 2021.

Have a happy Christmas, and we sincerely hope you get the chance to relax and reflect on what we have all achieved this year. See you in 2021!

| Professional in Payroll, Pensions and Reward | December 2020 - January 2021 | Issue 66 4

Congratulations to the newly accredited PAS organisations THE CIPP’s Payroll Assurance Scheme (PAS) is designed to test your payroll processes in relation to payroll processing, compliance and the people skills and development opportunities. One of the most important elements is ensuring business

Ken Pullar, CIPP chief executive officer, said: “Never has it been more important for businesses to have good payroll processes, knowledge and skills that enable them to implement new government legislation and guidance quickly. “Congratulations to those organisations that have recently demonstrated just that.” The Payroll Assurance Scheme is still operating, with assessments currently operating virtually. To find out how the Payroll Assurance Scheme can benefit your organisation, email [email protected].

continuity plans are in place and effective should they be required. Given recent events, congratulations to all organisations that have achieved this accreditation and will have been able to put those plans into action. Special congratulations to our recently accredited organisations:

● Frontier Software PLC ● IRIS FMP (Cascade) ● LKQ Euro Car Parts Ltd

Market insight survey IT’S YOUR time to have your say on the services the CIPP provide, as we launch our market insight survey. Set some time aside, grab a cup of tea and tell us your thoughts. Your reply to this survey helps us shape the future of the CIPP, ensuring we understand your needs and support them the best way we possibly can. Check your inbox for the survey and make sure you do not miss this opportunity to have your say.

The CIPP Annual Excellence Awards 2020

THE CIPP’S Annual Excellence Awards are the industry’s most prestigious awards for individuals and organisations who have had a positive impact on the payroll, pension and reward professions over the last twelve months. The 2020 Awards took place online for the first time ever, on 15 October. The CIPP was overwhelmed by the number of nominees, especially considering how busy CIPP members and payroll professionals have been over the last twelve months. Ken Pullar FCIPP, CIPP chief executive officer, commented: “The nominations we have received show true professionalism and excellence within the sector in what can only be described as one of our most challenging years.” The CIPP extends thanks to the sponsors and to the judges.

Newcomer/Apprentice of the year Sponsored by ADP Chloe Hesketh ACIPP, Civica UK Limited

My biggest influencer award Sponsored by Workday Maria Mason MCIPPdip, BDO UK Software product of the year Sponsored by Cloudpay Zellis UK Limited, ResourceLink

Manager of the year Sponsored by Cintra HR & Payroll Services Dianne Hoodless MSc ChFCIPP FHEA, Hyperion Services Limited

International payroll service provider of the year Sponsored by Portfolio Payroll ADP

In-house payroll team of the year Sponsored by iRealise Vertas Group Limited

Payroll service provider of the year Sponsored by OneSource Virtual Cintra HR & Payroll Services Ltd

Project of the year Sponsored by The Payroll Centre Legal and General, OCE payments work stream Well-being and employee engagement award Sponsored by Intelligo University of Lincoln

Special award in recognition of services to payroll HMRC

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| Professional in Payroll, Pensions and Reward |

Issue 66 | December 2020 - January 2021

MY CIPP

On your behalf

Policy team update

The CIPP’s policy and research teamprovide an update on developments

P ayroll professionals have been exceptionally busy this month, and similarly the CIPP policy and research team have been challenged by the ever-evolving government measures implemented to help businesses and workers through the economic turbulence created by coronavirus. Whilst these initiatives are to be applauded, as they are designed to help retain links to employment, the pace at which new policies have been amended has been difficult to keep up with, to say the least. Extended coronavirus job retention scheme Eagerly – and, we admit, impatiently – we awaited guidance on the job support scheme (JSS), and its two variations (‘open’ and ‘closed’) ahead of introduction from 1 November 2020. Though guidance was finally released on 30 October 2020, it was promptly withdrawn following the announcement the next day by prime minister, Boris Johnson, which confirmed that the coronavirus job retention scheme (CJRS) would be extended to run for the month of November. This announcement was made only a day before the new measure was to be introduced, giving businesses and payroll teams alike severely limited time to respond and adapt

to the changes. Following this, Rishi Sunak, chancellor of the exchequer, spoke in Parliament on 5 November 2020 to confirm that the CJRS would actually be extended until the end of March 2021. This means that the JSS will be postponed, and also that the job retention bonus (JRB), due to be paid out in February 2021, will no longer follow the same timescales, and a retention incentive will be deployed at a different, more appropriate, time. Once again, payroll professionals are having to deal with substantial changes within very stringent deadlines, so it is important that they are recognised and appreciated, during what will be an extremely busy – and, arguably, stressful – time. From a policy perspective, it has been difficult to keep track of the flurry of changes, but the team has endeavoured to keep members up to date with all of the news that will affect their day-to-day work. Policy and research updates As a reminder, the policy and research team publish updates through News Online which is delivered to members’ email inboxes the next day. If preferred, weekly news emails can be requested by amending your details in the member section of the CIPP website www.cipp. org.uk/my-cipp.html . News is also

cascaded through social media platforms such as LinkedIn, Twitter and Facebook. The team also produce factsheets and FAQs, also available through the Policy Hub, and record a monthly webcast which provides an overview of a given subject. As you may imagine, coronavirus measures have dominated the webcast subjects this year, but are by no means the only subjects covered. Employer NICs holiday for employment of veterans HM Revenue & Customs (HMRC) recently published a consultation – Supporting veterans' transition to civilian life through employment (http://ow.ly/NVKr30riOO8) – which ran from July until October 2020. This exercise explored some of the intricate details of the new entitlement to a secondary class 1 National Insurance contributions (NICs) holiday for a twelve- month period being introduced from 6 April 2021 for employers of veterans. Although the consultation placed a lot of emphasis on certain definitions, including what the definition of a ‘veteran’ should be, and what the definition of ‘civilian employment’ should include, from the results of a survey and a virtual thinktank meeting that the policy team held it became apparent that payroll professionals were not particularly interested in these elements of the consultation. They were, however, concerned by the government’s proposals for administering the initial year of the relief. The intention is that employers will pay secondary class 1 NICs on the pay of the veterans for tax year 2021/22 and will then claim a credit for the amount in question via real time information (RTI) –

...payroll professionals are having to deal with substantial changes within very stringent deadlines, so it is important that they are recognised and appreciated...

| Professional in Payroll, Pensions and Reward | December 2020 - January 2021 | Issue 66 6

O N L I N E L E A R N I N G

Policy hub

FOUNDATION DEGREE ACCESS COURSE

...would have created a considerable administrative burden for those working within payroll departments and dealing with sickness.

This course is a bridge to year two of the CIPP Foundation Degrees in either payroll and

specifically, the full payment submission (FPS) – from the start of the following tax year (2022/23). From this point onwards, a real- time solution will be offered, meaning that the employer does not pay secondary class 1 NICs on the pay of qualifying veterans. Payroll professionals indicated that they did not favour this approach and asked why an existing NICs category (table letter) couldn’t be utilised, such as ‘M’ which is used for employees under the age of 21. This letter means that no employer NICs liability is attached to the employee’s earnings up to the upper earnings limit at which point the employer begins to pay secondary class 1 NICs at the rate of 13.8%. Another suggestion was that a new NICs category/letter be established for the relief to be added to the payroll records of eligible veterans. The concerns were that this seems unnecessarily complex and poses an administrative burden on payroll departments. In addition, the fact that employers would have to wait to benefit from the employer NICs savings may deter them from using the entitlement in the first place. The CIPP’s policy team submitted a formal response to the consultation, which can be located in the Policy Hub area on the CIPP website: https://bit.ly/38qOjNO. SSP1 form Towards the latter end of 2019, the SSP1 form available online was amended (http://ow.ly/TklE30riORA). This indicated that a SSP1 form would need to be completed every time an employee had a period of sickness that amounted to less than four consecutive days. This was a new requirement which would have created a considerable administrative burden for those working within payroll departments and dealing with sickness. The option provided was: “You have been off sick from work for less than 4 days”. Similarly, several scenarios in which a SSP1 form would ordinarily be issued had been removed. The CIPP and other stakeholders

approached both HMRC and the Department for Work and Pensions on the matter, and raised this issue at the Statutory Payments consultation group on which the CIPP sits, to advise that this form could potentially create extensive administrative burden and confusion for both employers and employees. The feedback was acknowledged and taken on board: the amended form was removed and the original restored. At the time of writing, however, only the version that needs to be printed off and completed by hand has been changed (http://ow.ly/pczt30riOTO). The electronic version that is completed on screen and then printed has not been amended (http://ow.ly/YJ4Z30riOUW). This issue has been raised with the relevant departments, and it has been confirmed that both forms will be aligned, and that the on-screen version of the form will be changed in due course. Payroll professionals may use whichever form is appropriate to the scenario they are dealing with. They are reminded, however, that there is no requirement to complete a SSP1 form for periods of absence that are less than four consecutive days in duration. And, finally… Member feedback plays a significant part in ensuring that the policy and research team accurately reflect views of the payroll profession which includes both members and also, by virtue of the CIPP’s Chartered status, the wider profession. We gather views through surveys and through Think Tank roundtables, which normally would be held face-to-face but due to the exceptional circumstances this year have been held virtually, using Teams. This move has been successful, and we would just like to take the opportunity to say thank you to all members who have taken part. Your views count, and they go a long way in affecting the direction of travel of government policy. n

pensions, and specifically designed for those who have the experience, and would now like a formal qualification We have developed this online course to provide those who have completed one of our level three certifications, or who have two years experience and are confident with manual calculations.

If this sounds like you or a member of your team, enrol today.

CPD 18 points

For more information or to enrol: Visit: www.cipp.org.uk/study Email [email protected]

Call: 0121 712 1023 Live chat with us

Wishing you all, a very happy and healthy 2021.

cipp.org.uk @CIPP_UK

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| Professional in Payroll, Pensions and Reward |

Issue 66 | December 2020 - January 2021

MY CIPP

The CIPP's Advisory Service team provides answers to popular questions

Q: As it was my understanding that the March 2020 pension contributions were for tax year 2019/20, I made payment of them to the pension scheme before 6 April 2020. I was not aware, however, that the actual pension contributions for our company were to be paid to the defined contribution pension scheme around 15th of the following month (i.e. in April). Therefore, thirteen payments have been made to the pension scheme for tax year 2019/20. Can you please advise if it is correct to make pension contributions for March before the start of the new tax year and what effect if any there might be for members? A: When making contributions to a pension scheme, employers and pension scheme administrators should be aware of the annual allowance and the due date for making contributions. The annual allowance is the limit for tax relief purposes for: (a) the total amount of contributions that can be paid to a defined contribution pension scheme; or (b) the total amount of benefits that a member can build up in a defined benefit pension scheme. The annual allowance is currently £40,000 although a lower limit of £4,000 may apply to those who have already started accessing their pension. The annual allowance is not a ‘per scheme’ limit. (See guidance on the Pensions Advisory Service site: https://bit.ly/3lqJKXz.) The rule is that member contributions to defined contribution pension schemes must be paid by 19th of the month following the month in which they were collected from pay (or by 22nd if contributions are paid electronically). These dates do not override any earlier due date specified in the payment schedule. Employer contributions must be paid by

the due date in the payment schedule. Although March contributions might be scheduled for payment to the scheme by 19 (or 22) April, this does not preclude the possibility of making payment earlier (e.g. before 6 April). Though it would seem that thirteen monthly payments of contributions have been made in tax year 2019/20, thereby raising the possibility that the extra contributions might have pushed an individual’s pension savings over the annual allowance, this may not be the case as the tax charge arises on excess savings in the individual’s pension input period. You should discuss the issues with the scheme administrator. Q: I have a request to deduct lease contributions for car hire from an employee’s earnings. Can you advise if this deduction is from net or gross pay? A: Any lease costs would be deducted from the individual’s net pay. For more information see section 114(A) of the Income Tax (Earnings and Pensions) Act 2003. If your employees have lease agreements, company car benefit taxation rules will apply, and the provision of the car must be reported in the P11D return. Any contribution made by the employee is then reported as an amount made good in the return. Q: We have implemented a new system whereby employees can have the facility of accessing early pay for pay already earned. Could this affect staff members who are on universal credit? A: The term used to describe a payment does not decide its treatment, as it is necessary to look at the substance of

the matter. Something described as an ‘advance’ may actually be a ‘loan’ or a ‘payment on account of earnings’. Section EIM42280 (https://bit. ly/2GCFkh0) of HM Revenue & Customs’ (HMRC’s) Employment Income Manual , addresses the issues. If an employee and employer make an agreement under which the employer lends money that the employee agrees to repay at a future date or dates, the amount is a loan not a payment on account of earnings. A system allowing employees to draw an advance of salary is a loan repaid out of a future salary. PAYE (pay as you earn) is applied when the salary is paid – not when the advance is. In the noteworthy case Williams v Todd, which involved an interest-free advance to an Inspector of Taxes, Justice Walton said “I do not consider that the advance can be truly called anything other than a loan”, noting there was “an express term of the advance that it is repayable on demand” and adding “the advance does not fall within the scope of income to be assessed under the PAYE system.” For purposes of universal credit, the Department for Work and Pensions receives claimants’ earnings information from HMRC that had been supplied in employers’ full payment submission (FPS) returns. Thus, if the advance is a ‘loan’ and not a ‘payment on account of earnings’, the employer would not make a FPS to report the amount advanced, as the earnings would be included in the FPS return when the employee was paid for the pay period in question. Q: How would you deal with overpayments made in a previous tax year and those in a current tax year?

| Professional in Payroll, Pensions and Reward | December 2020 - January 2021 | Issue 66 8

Policy hub

NEWTO PAYROLL?

A: Looking at overpayments from the point of view of PAYE and National Insurance contributions (NICs), the court case British Railways Board v Franklin provides guidance (see HMRC’s Employment Income Manual at section EIM00815 (https://bit.ly/38fk38j)). Where the employer can only recover the net overpayment, the guidance at paragraph 1.19 of the CWG2 ( Employer further guide to PAYE and National Insurance contributions ) (https:// bit.ly/2JIRSEH), says that for current tax year overpayments of salary the employer has to correct the figures so that the payment to the HMRC would be adjusted in the following tax month. For closed tax years, the employer is expected to correct the figures and to write to HMRC to recover the tax and NICs rather than the employee requesting a refund. Previously correcting the figures was done via an earlier year update (EYU) but from April 2020 the EYU ceased to be a valid submission. For future years employers will need to use the extended FPS to revise year to date payment >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54

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